At some point, you might find that your business is in debt. This can seem like a discouraging predicament, but there is a way out of it. You’ll simply need to think of some strategies that will get your business back on top so that you and your business partners can recover nicely. The following are some ideas that you can use to get your business out of debt.
Debt consolidation is one route you might want to go. You have to meet two qualifications to conduct a traditional debt consolidation. For one, you will have to have more than two business credit cards or accounts. Secondly, you’ll have to have a credit score that hasn’t tanked yet. The prospective consolidation loan lenders may also want you to have a certain amount of earnings from your business, as well. If you meet these criteria, you can apply for a business consolidation loan. That loan will put all of your debts into one monthly payment. You’ll no longer have to pay numerous entities each month. You’ll only have to pay the entity that provides you with the consolidation loan. The consolidation loan can help you get out of debt by giving you a lower interest rate and organizing your debt to only pay one entity. Sometimes, businesses get behind because they can’t keep track of their numerous payments. A consolidation can eliminate that problem for you.
You can use one of two alternative solutions for debt consolidation, as well. You could move your debt to a high-limit credit card, or you can get on a debt management plan. A debt management plan employs a third party person who will take payments from you every month and then distribute them to your creditors.
Bankruptcy is another option for your business. You have two options for filing bankruptcy as a business. You may be able to file a Chapter 7, which will eliminate your debt. This chapter is best used if you have no possible way of recovering from the debt you’re under. It should be a last resort if you believe your business is going completely under. In Chapter 7, a trustee will distribute your business assets among your creditors, and you will receive a discharge on the rest of the money you owe. This option can destroy your business credit for 10 years.
Another option you can consider is Chapter 11, which is a restructuring bankruptcy chapter. It will allow you to create a repayment plan so that you can pay some of your debt over time. You will also have the option to have some of your debts discharged. It would be best for you to contact a bankruptcy attorney to discuss your options. Bankruptcy filings affect consumers’ and businesses’ credit profiles for so long that they sometimes don’t know whether it’s worth it to do so. Only consider this if you are at your wit’s end, and your business doesn’t see a turnaround anytime soon.
You may also consider doing a debt settlement process to get your credit profile back to where it needs to be. In a debt settlement, you can negotiate with your creditors via a third party to pay the debts you owe for less than the balance. For example, you might offer to pay $3,500 on a $5,000 debt. In exchange, the creditor will mark the account as paid, and it will stop reflecting negatively on your credit report. Keep in mind that your creditors are not obligated to remove the status of such accounts. Therefore, you will need to have a third party who is assisting you in reaching an agreement with the creditors. You should get the agreement in writing so that you can go to the credit bureau of the creditor fails to remove the item from your report.
Start Working Your way Back to Financial Health
Now you can start practicing some of the above-mentioned suggestions so that you can get your business back where it needs to be. There’s no reason to continue to stay in debt when you have these options. Start today so that you can visualize a brighter future tomorrow.
About the Author: Samantha Higgins is a professional writer with a passion for research, observation, and innovation. She is nurturing a growing family of twin boys in Portland, Oregon with her husband. She loves kayaking and reading creative non-fiction.